Bucks Arena Legislation Stays Out of Budget

On Monday, the Joint Finance Committee (JFC) held an executive session to introduce SB 209/AB 279, the Sports and Entertainment Arena – or Bucks arena bill. Immediately following the executive session, JFC held an invitation- only information hearing to hear testimony from the various stakeholders. After five hours of testimony, the committee finally adjourned.


The central piece of the financing plan expands the Wisconsin Center District’s (WCD) authority to issue up to $203 million in bonds. The state would provide grants to WCD of $80 million in general purpose revenue (GPR) over 20 years ($4 million each year), of which $55 million would support principal payments and $25 million would cover the interest. In addition, a second appropriation from the state will provide $4 million GPR each year for 20 years for grants to WCD, of which $55 million will cover principal payments and $25 million will cover interest payments. This second allocation, while similar to the first, would be offset by revenue from debts collected by Milwaukee County. The first $4 million annually received by the state would be transferred to the general fund.

The state would also provide a one-time appropriation of $10 million GPR in fiscal year 2016-2017 for the existing Bradley Center to retire its obligations and contractual liabilities. Outside the arena legislation, the capital budget included in the 2015-2017 state budget (as voted on by JFC) includes $6 million in bonding for maintenance and repair projects at the Bradley Center. Department of Revenue estimates there would be $2.6 million in bond interest.

WCD would issue $93 million in new debt, which would be financed by existing WCD taxes. Under the plan, current sunset dates of WCD’s food and beverage taxes, vehicle rental tax and local room taxes would be repealed and the taxes would be extended indefinitely. In 2014, WCD collected $29.9 million in revenue from these taxes. At the hearing, the Legislative Fiscal Bureau stated that it is estimated that the WCD would not begin to repay the bonds it would issue for about 13 years.

Before the state will provide any funding for the project, the Department of Administration would have to determine that the City of Milwaukee has provided at least $47 million and that the WCD has begun to issue debt for the development and construction of the new arena.

The City of Milwaukee’s obligation for the arena would also include a new $35 million parking structure and another $12 million in bonds for a tax incremental financing (TIF) district.

Bucks’ owners are responsible for $250 million in arena funding.

TIF Changes for a First Class City

The bill also makes several modifications to the TIF statutes for a first class city. Under the bill, any expenditures or monetary obligations made or incurred by a first class city to fund a parking facility next to or within one-mile of public entertainment facilities, including new arena, would be considered a benefit to the TIF district and therefore be included as project costs. Another change exempts a first class city creating a TIF district, with a project plan approved after July 1, 2015, from the 12% rule, if project costs include a grant or loan to a local exposition district for the development and construction of sports and entertainment arena facilities. The 12% rule requires the equalized value of the proposed district plus the value increment of all existing tax increment districts within the city does not exceed 12% of the total equalized value of property within a city.

In addition, any grant, loan, or appropriation used for the development of the arena would be eligible project costs, as long as a development agreement has been made between the city and the local exposition district. Lastly, payments of project costs can be made from proceeds from revenue bonds issued by a redevelopment authority as under an intergovernmental cooperation agreement.

Clawback Provisions

Should the Bucks violate the development or non-relocation agreement, the Bucks organization would responsible for the outstanding balance of principal and unpaid interest remaining on any debt issued by or incurred by the WCD, the city, county or state. Also, should the organization be in breach of its obligations under the lease (equipment, maintenance, operations, repair of the facilities) the Bucks organization would be required to continue performing these obligations through the duration of the lease.


Testimony at the JFC hearing was invitation-only. The Legislative Fiscal Bureau (LFB) fielded questions for two hours before others began to testify. Peter Feigin, President of the Milwaukee Bucks, testified on the benefits of the deal, stating the clawbacks are strong and the Bucks would be responsible for cost overruns of building the stadium. He stated that the cap on state contributions to the arena makes the deal fiscally prudent for state government.

Bucks’ head coach Jason Kidd and general manager John Hammond attended the hearing, but did not testify due to media obligations at UW-Madison.

Tim Sheehy, President of the Metropolitan Milwaukee Association of Commerce, testified in favor of the legislation, citing the economic development benefits of a new arena.

A large panel of four spent much of the afternoon fielding questions from JFC members. This included Mayor Tom Barrett, Milwaukee County Executive Chris Abele, Wisconsin’s Chief Economist at the Department of Revenue John Koskinen and Department of Administration Secretary Scott Neitzel. The panel presented a united front of support for the deal.

Members of JFC were very critical of the legislation. Most critical of the deal were Senator Lena Taylor (D-Milwaukee), Representative Dean Knudson (R-Hudson) and Rep. Chris Taylor (D-Madison). During the committee hearing, Rep. Knudson asked to be recorded as a no vote on the bill, as he believes the project should be financed at the local level exclusively. He also stated his preference that the bill go through the normal committee process.

Next Steps

The legislation has been introduced in the Senate and Assembly and will advance through the legislative process. JFC is unlikely to hold a formal public hearing, therefore next steps will be for a committee vote on the bill. It will then go to the Senate and Assembly for debate and passage. The Senate has wrapped up their budget action, which historically means the legislators head home for the summer. However, the legislature has called for an extraordinary session that includes the Bucks deal so they can come back at any time to take up the issue.